Is Par Pacific's Refining Business More Resilient & Competitive?

Par Pacific Holdings Inc. PARR is mainly a refining company with the capacity to process 219,000 barrels of oil daily. Instead of relying on a single source of crude, PARR has been relying on crude from a variety of sources, comprising U.S. inland oil fields, imported oil delivered by ship, and Canadian heavy crude.

Notably, a significant portion of crude oil sources is waterborne, while 22% consists of Canadian heavy oil. While exposed to multiple sources, Par Pacific has the option to switch if the price of one crude oil type rises.

Additionally, having exposure to Canadian heavy oil, which is cheaper than lighter crude, Par Pacific is likely to have been enjoying a cost advantage. In other words, the refining player has been capable of using lower-priced fuel to turn it into high-value end products, giving it an edge over other refiners.

PSX & VLO Are Two Other Leading Refiners

Phillips 66 PSX and Valero Energy Corporation VLO are the other two players operating in the same business space.

However, Phillips 66’s business model is more diversified, as it generates revenues from midstream operations as well. As midstream operations are less vulnerable to volatility in commodity prices, PSX’s business is highly predictable.

Valero Energy, with 15 refineries, has a throughput capacity of 3.2 million barrels per day. VLO mentioned that its refining activities are capable of generating sufficient cash flows to support shareholders’ returns along with growth.

PARR’s Price Performance, Valuation & Estimates

Shares of PARR have surged 174.3% over the past year compared with the 18.7% improvement of the composite stocks belonging to the industry.

From a valuation standpoint, PARR trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 5.20X. This is above the broader industry average of 4.57X.

The Zacks Consensus Estimate for PARR’s 2025 earnings has seen upward revisions over the past 30 days.

Par Pacific currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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